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We clearly are living in a world of speculative bubbles.
First, we had the tech stock bubble. Then the housing bubble. And bubbles being what they are, each one burst in due course.
Next, came the government debt bubble — as $2 trillion in government spending and bailouts temporarily buoyed stocks.
And now, with cracks appearing in stocks, the only remaining bubble that has not yet popped is the global bond market.
Just this week, for instance, the yield on the benchmark 10-year Treasury fell below 3% for the first time in recent memory. The Fed has supported prices so aggressively — and fear money has poured in so steadily — that bond prices are now at their highest level since before I was born 63 years ago.
The Highly Deceptive, Extremely Dangerous,
Myth About Bond Prices in a Recession
The problem is that almost nobody is prepared for this fourth and final bubble to burst. Instead, many investors I talk to believe a myth — and that myth could cost them a not-so-small fortune in the weeks ahead.
They believe the axiom of economics that bond prices always go up in a recession. So as the U.S. economy sinks again, that’s what will “inevitably” happen, they say.
In normal times? Perhaps! But these are anything but normal times.
Bond prices, interest rates and currency values are not set by investors in a vacuum. In times of extreme turmoil and massive sovereign debts like today’s, global money will flee the economy that’s sinking and rush to the economy that’s the perceived to be the least risky.
That’s precisely what just happened to Europe: As the heavily-indebted economies of Spain, Portugal and Greece sank into recession, global investors flew the coop, dumping stocks and bonds alike. So instead of causing bond prices to go up, we saw precisely the opposite sequence of events.
Their recessions precipitated a collapse in bond prices and caused interest rates to SURGE!
In Greece, their bonds cratered and 2-year Treasury rates jumped from 2.5% to 18%. In nearly every other PIIGS country, we saw bonds crash and rates skyrocket as well.
Investors said simply: “Economic theory be damned! This country is going down. I want out.”
Now …
Guess which nation is THE largest, the
most heavily indebted in the world … AND
already sinking into a double-dip recession!
It’s the United States, of course.
And imagine what will happen to bonds when the sovereign debt contagion leaps the Atlantic and lands in New York City!
What if the Fed prints up even more paper money? It will only drive even more fear into the hearts and minds of global investors, just as it did in Greece earlier this year. End result: A collapsing dollar and a plunge in nearly all dollar-denominated assets.
For experienced investors, this opens up several major profit opportunities. So my question to you for today is …
Are YOU planning to grab your share of this profit potential when the U.S. dollar and U.S. bonds plunge? And if so, how?
Just click this link to leave a comment and let me know what you think. Your answer will go a long way to helping your fellow readers better prepare for what’s ahead this summer — and beyond.
Good luck and God bless!
Martin
{ 112 comments… read them below or add one }
Inverse ETFs is the answer. SEF,SH,TBT is a good start but be careful. Must monitor these carefully. Remember, you can get in and out of ETFs as easily as stocks. The trick is when to do so to reap the most profit.
I have been long TBT for several months anticipating the bond bubble. not least because of my Weiss reading. Were I not hedged selling out/at the money calls, I would have lost my bet on the bubble. Friday, looking at simple moving averages and the breaking of US $ support, I am convinced my time has come.
How high can long term bond yields rise assuming the Fed keeps short term rates so low ?
Ray
Since I already own lots of gold, silver, platinum, palladium, & other natrual resource stocks, my next move is to buy real estate on the beach in Panama, which offers lots of incentives to retirees, and is a country with a future.
I believe americans will be fleeing the USA to countries like Panama, where the US dollar buys a lot more, especially with all the incentives they offer retirees.
Sounds like TBT time to me….
Martin, what will happen with corporate bonds?
The obvious thing to do seems to me to be to buy bonds at high interest rates. However, won’t that be another bubble in itself?
I believe that the Time is right to allocate 20% of one’s portfolio in the ETF (tbt).
At first look it is surprising that bond prices should be going up when so much debt is being created out of D. C. However the volume is so large that when money has left Europe and other places and gone into the U. S. Treasuries of various maturities, where can all that money go next. The answer it seems to me is nowhere, there is nowhere else to go for safety. With a national debt of about $12 trillion and rising $ 1.5 T or so each year, where can those funds go if it wants out all at once. It that the secret of our Fed.; that the money has nowhere else to go?
c.
Hi everyone;
George Soros at Pimco says he does not think there will be a Bond Crash. I am so confused.
Excuse me? Where are people going to flee to? Didn’t our dollar surge against the Euro because of the European crises? What country is safer than the U.S? If the U.S. goes down, what country will remain unaffected. In a global economy, how can the biggest player, biggest buyer, go under without a worldwide collapse? We might as well buy cans of tomato soup. Please enlighten me.
In a diversified portfolio, what %age of gold and/or gold funds might be recommended in the current environment?
I intend to buy TBT which goes up when bond prices go down.
Are some junk bonds safe enough to buy now? Some are apying 10% interest.
Daniel
What about recommendations in Crisis Profet Hunter, Dividend Stocks, and Rapid Millionaire recommendations.
At the recent G20, Obama got a lesson in strategy for politician’s job security from the other members of the international political elite.
Obama said SPEND, the other politicians said CUT. And lo and behold, the cutters prevailed.
SURPRISE!
Voters threaten politicians who spend. THAT IS THE NEW REALITY.
So now put yourself in the shoes of the DC pols and ask yourself, whose ox will you gore?
Look at the voting blocks and see the answer.
AARP, i.e. the older generation, they have the votes, and they will turn out on election day.
So pols will basically preserve the social security system and the military and cut everything else. Yes, aid to states and cities will be a thing of the past. DC will let they wallow in their own misery.
Thus muni bonds will collapse, and we will see defaults of debt at all levels of gov’t below the feds.
For a view of that future, let’s look to California. Schwartznegger has a court ruling that orders the Calif state comptroller to comply with the Governator’s orders, i.e. to pay Calif state workers the federal minimum wage until the state budget is signed by the governor. The comptroller doesn’t want to do this, he even says the computers cannot make such payment changes, but eventually this model will take hold across the country.
Taxpayers will take out their anger by eventually forcing pols to extract spending cuts by dinging the wages of gov’t workers, unionized or not.
Thus the nature of the upcoming gov’t spending cuts, across the whole of the developed world, is one of beggar thy neighbor and cut the gov’t workers loose.
But which debt to continue to service?
The instinct for self preservation will cause the bureaucrats of the federal gov’t to honor the US bond.
This is because trade in the future will depend on solvency of the soverign. Default means no trade. Even the US gov’t cannot afford that.
So while most asset prices will collapse, including gold and silver, including defaults on bonds at all levels lower that the US gov’t, including massive unemployment, the US gov’t will pay the bonds payments on US debt.
So the last bubble is spending by gov’t around the world. And the rules for bursting that bubble have just been voted on by the G20.
In the near future, US presidents will attend G20 meetings and brag about their belt tightening, their draconian spending cuts, and thus keeps US trade going, in hopes of somehow finding light at the end of the debt default tunnel.
i was awarded one and one half cents on the dollar loss on fraudlent bond
losses involving a large internet /tech company and a very large bank.
this bank was awarded tax payer money by guess who when it lost money
gambling. dr.weis called the shots right on the collapse. i plainly remember
the federal reserve chairmain saying derivates stabilized the market. i could
go on about the zero interest rates with no down payment, etc. i don’t believe
our system is capable of dealing with the inevitable. the very ones that have
taken care of their business will most likely suffer most. hope i’m wrong.
I believe if people want to play it safe this time around, they should pull out of the market when the S & P hits 950. IF they don’t have gold, they should get some. Then they can play certain stocks based on Weiss advice!
I have gone to money markets (1.2%) in anticipation of a hugh interest rate increases.
I would like to invest in gold but the price, although inching upwards, looks like it is still being manipulated on a daily basis. Is the Fed secretly selling gold to keep the price down and proping up the dollar? Will they call in gold like they did in 1933? If so, at what price?
I guess timing is everything. I am closely following the Euro because I think the U.S. Dollar could temporarly strengthen when the Euro fails. Some time after that the U.S. Dollar will collapse, but when is the big question.
UB
To date my losses are under control,three to five points for the worst.
I am playing a watching game at this point.
I thought the comment would be on the yet to be seen material. I agree with what material I have seen so far. I believe that the government will pay off every bond at full face sum with interest, in newly printed money. At that time the depression street vendors who sold apples for $.05 will be back but apples will cost $10.00 this time.
I share your concern but it seems that when bonds are riskier the price drops and the fixed yields remain based on Par. I call this the Law of Gravity Revised.
Now our dilemna is when to dump our municipals/and or Treasuries. The Gov’t can print the money to pay their coupons and Municipals will pay their coupons rather than default.What other country has the capacity (Canada,Norway,Australia,NZ)?to take all the fleeing bond money and guarantee? I wait for signs of decreasing quotes on these bonds before I start to
dump them. It still pays very well.
Any better ideas?
LAW
I am thinking that in the end cash to buy after the fallout is the objective.
I feel that gold GLD and gold mining stocks will be safe.
I am investing with physical gold, silver and stocks in these sectors. Plus, I am short 20-year treasuries.
There must be some”real” demand for U.S. Treasuries- they must be oversubscribed for a reason. And if the U.S. does “collapse”, what will the rest of the world do? Who would China sell their stuff to? And if demand for goods and services severely drops off, why won’t demand for oil and gold also fall dramatically? Wouldn’t cash be king? I am not understanding how a collapsing economy would be inflationary. Wouldn’t people just buy and use less?
So many pundits have been advocating gold. I’m wondering, if gold is going to be so valuable, then why are so many are trying to sell it?
I’ve hung out for 3 years in my physical gold and cash so I can sleep at night. I may stick my toe into some inverse ETFs on $$ and bonds, but with the way the fed pulls every possible rabbit out of their hat, I don’t trust ANY of MY gut instincts or charts for short or intermediate term plays.
I think gold and silver will go up. They have been a traditional store of wealth for thousands of years and things haven’t changed for that. The more they debase the currency, the more it will go up.
I would hope you give us the correct put option in the world currency market for the dollar and the corresponing re action on the other currencies that would be a huge windfall.
Martin:
Since you’ve been preaching” doom and gloom: for a decade or more,you’re bound to be right some of the time. I lost a lot of money with your inverse ETF’S in 2008-09,so I’m skittish about them now.
Re: the astronomical spending in Wash. now, without it we would likely have tens of thousands of Americans living on the streets. As for those who scream about the politicians in charge,remember the saying,”People get the elected officials they deserve”. Did you scream about the two wars, the farm subsidies,the oil company tax breaks, and countless “pork projects?”
Our only hope is to have publicly financed elections. HOW ABOUT IT!!
The desparate effort by the FED to hold the interest rate to near zero is a certain failure awainting yje proper chrisis to trigger the big sell off. It is easy to see what is going to happen, but impossible to set a date/time for the event. To all holders of any kind of government bond, sell on Monday. Hold your cash to buy bonds paying 15-20%.
gpd Bless.
Bonds are due for a big fall.
Problem is “no information that is reliable” to track the timing. What is the data source and chart that reflects the bond weakness…and the signal that tells us when the fall will begin? I can see S&p and DOW charts and moving averages. Help us with similiar data on bonds. For my own accounts I have closed out all bonds except @2010 and 2011 maturities on Ford and 2013 on Williams Energy (all at 8% APY). Will not reenter until I see at least a 40% correction. Need Weiss guidance here.
Now is the time to be more aggressive in this trend.
I am trying to buy stable income producting stocks for their dividend. I am completely
out of the bond market.
Hi Martin: I don’t have any advice. I’m depending on your recommendations.
Sell all bonds. Buy inverse ETSs based on dollar and more gold, then silver and possibly platinum. Buy stocks based on stronger country economies and currencies. Buy some
Liithium stocks.
In the longer term I feel ones best security is to invest in tangibles that are either essentials (e.g oil)
items in limited supply (eg Precious metals.Rare Earths etc) or irreplaceables (e.g. Investment grade collectibles (e.g. Rare Notes,Coins. Art etc).
These things may take a hit but have intinsic recovery capability in the longer term.
Sell all bonds. Buy inverse ETFs based on dollar and more gold, then silver and possibly platinum. Buy stocks based on stronger country economies and currencies. Buy some
Liithium stocks.
So what should I do start shorting bonds like in James
?????????????
I’ll be in world dominating companies like mcdonalds, and the future markets.
What is the true fair market value of money? What is history’s answer? I would hope that you , as a true expert in financial matters could give us your estimation. If we don’t know where we are going, how will we know how to get there, or how will we be satisfied when we have arrived. I believe that most of us would be very satisfied in the six or seven percent range, four percent plus a two or three percent inflation rate. The Catholic Church a few hundred years ago, when it had the power to do so, to eliminate usury set, the interest rate in Europe at three percent. It held for a while and then floated back up to its former market detimined rate of four percent. In 1948 – 50 I sold Real Estate in San Francisco. The Bank of America mortgage rate was six percent . Tell us how we can earn an honest six percent. Thank You, Sir.
Dear Martin,
I agreee with you and think the ecomomy is a disaster and will not get better for a long time. There is nothing to change the direction of where we are going. Jobs, Taxes, Spending, Housing, Exports, Manufacturing here, and the dollar.
China is the main player.
When do you think the debt bomb will start pushing up interest rates in the US Martin?This fall, next winter, sooner or later? I intend to sell futures on T-Bond and buy puts to protect myself. Look forwar to your comment and advice on this matter.
GOLD
I have Gold and silver one oz coins. and I am holding the ProShares short Dow, Real estae, Financials, And 20+ short Bonds. Some of these are Ultra Short. I have a slew of CDN gold stocks. GG K and ELD. Also SVM and a slew of junior CDN golds and some Geothermal along with a lot of other resource stocks. I’m not sure how I will survive WTSHTF, (see Sean Brodrick’s book The Uran Survivalist Guide) but I can think of no better way to prepare myself for this.
Brian Riordan
I would saying using inverse ETFs on the U.S. stock market and Japan’s stock market. I would also invest in a fund that tracks gold, but not companies that mine gold, as they are too susceptible to the current of the market downturn. Also, foreign markets like China, India, and Brazil seem too risky at this juncture.
HI Weiss group,
I have been an enthusiastic follower for years. I agree the bong market is looking like a bond market rollover is on it’s way. I had requested to have a Weiss representative examine my current portfolio, which is now mostly made up of short term bonds. I am 100% cash in the equity market.
Thanks for your help,
Patrick Rawson
Elliott WAve theorists predict DEFLATION will preceed INFLATION. I am shorting the S & P 500 now & inthe medium term & long the S & P in Feb 2011, at lower prices. I plan to short GOLD soon on the next bounce and have PUT leaps on SILVER I want cash on hand to buy cheaply of food and other investments.
I am a resident of India and lately I have been thinking to leave my earnings there instead of sending them out quarterly as in the past. For the last two years, I have kept money in Thailand and if I could find a convenient way, China/Hong Kong. Watching first hand at how vibrant and energetic the Indian economy is and comparing that to what I see in the west, I have the feeling that moving funds to safety will involve taking a bet on the fast developing economies of Asia.
inverse long term bond ETF
Have no idea. If stocks are not safe, and bonds including T-bills are going to drop, and cash as represented by safe dollars are going to drop I don’t know
You could argue that the only thing to hold is gold, but gold could also turn into a bubble
So the the other Martin, Martin Weiss, what do YOU think?
Have cash ready to invest when bonds become a good buy
Great comments, I agree………….
Thanks for including me. I’m curious as to the safe place to be right now.
Looks like the Rough Times that Howard J Ruff wrote about a few years ago. He said the dollar collapse would bring chaos in the cities, because transportation systems will come to a halt the store shelves will empty, looting and rioting will prevail.
So the only thing of value will be food stuffs and necessities of life.
The Bible says in the end times there will be tribulation worse than it has ever been before or will ever be again. People will be throwing their money in the streets. It will cost a days wages for a quart of wheat.
The world scene appears to be headed that way.
To protect me and mine, will be difficult.
Hoarding things could help but you will have to be able to defend your hoard with firepower.
The Mormons are doing that now, (hoarding). Toilet paper will be more valueable than gold.
I dont see any investment strategy to help under this scenario.
However if things dont get that bad, Then short the markets, and everything but commodities.
Well I have gold and gold stocks , but I am even getting nervous about them . The other thing I am looking at is reverse ETFs , however if everything really goes to hell will these things really pay . What about the counterparties to the ETFs transactions . What if they go belly up and nobody gets paid .
Short the S&P 500 (SDS) Buy 9 to 12 Month Deep in the Money Options on BVN, EGO, NEM, GOLD and NGD on any pullbacks, accumulate Silver Eagle/Silver Rounds every week/month and take physical delivery. Buy large caliber weapons, beans, spam and whiskey. DOC
What recommendations for the stocks recomended in Dividend Superstars, Rapid Millionaire, and Crisis Profit Hunter?
I am anxious to hear your comments. rb
I really do not give a damn what the other people feel we should do. I need to know what you recommend. That is what I subscribe for. I am out of ideas. What are yours, Martin. YOU are the person with the Ph.D. Let’s hear it!!!!!
I don’t know what to do. Most people say covert to cash, but the dollar won’t have much worth??!!
We should short the dollar and go long gold,silver.
Hey Martin,
I definitely think we are in a bond bubble. The question is (In what time frame do you see interest rates moving up and by how much on the bonds?) The US government can only buy its bonds for so long (kind of like the dog eating it’s own tail.)
I have followed your articles that you wrote about regarding your dad surviving and doing well during the first Great Depression. Do you think we are in the 2nd Depression just camouflaged by government bail out money?
Yes. I will follow your lead.
Question about your question “Are you planning to grab your share of this profit potential when the U.S. dollar and bonds plunge? I’d like to know how…
David Weidemer in “Aftershock” says: 1(stay away from stocks and real estate until after the dollar bubble pops. 2) Stay away from long-term bonds and all fixed investments (including whole life insurance).
Some of my annuity (403b) is in bonds, to avoid the falling stock. The bulk is in an IRA in an Insurance Co tied to S&P 500, supposed to not ever lose, but goes up if the market goes up.
I have a little in gold silver.
As I see it I should take the IRA and invest in something else, but where and in what?
Weidemer says there are two more bubbles – the dollar and the government debt bubble. Then chaos… Don Farmer
Dear Martin Weiss,
From your newsletters I glean that United States might be is headed towards price inflation.
My wife and I bought a condo in 2007 in San Francisco Bay area, just before the housing market crashed. Now our mortgage is about 20% “underwater”. We tried modifying and refi to no avail.
We are now contemplating a strategic default, whereby we simply stop paying our mortgage and eventually move out to a rental.
What I read about other countries that experienced inflation is that salaries kept up with inflation, and people who owed money eventually paid off their loans with “cheaper” dollars.
I understand that it is difficult for you to answer such personal questions, but here it goes.
Do you think is makes sense for home owners that are significantly underwater to default now, or should they simply wait for inflation, and pay off their houses with cheaper dollars?
Thank you for your time!
I like the proshares TBT and gold.I think both well do well through this
disaster.
Martin, what is our your thoughts on financial forecaster Gerald Celente, and his insight?
Agreed bond prices will go down to factor in the risk premium demanded by spooked investors. Buy the TBT? It’s down 28% in three months. But won’t the dollar appreciate as people flock to it? Also, the debt that the Fed is taking on is going to bad loans (debt destruction) so it won’t cause inflation until they overshoot. Seems like that’s a long way off.
How about SRS Real Estate Super-short fund? Is realestate done declining? I would say not.
Thanks for all you do.
John
I will negotiate a deal with PIMCO to package a treasury portfolio with a mean interest rate of almost 1% to 2% and buy a 3 year interest rate call option on the derivative portfolio, pending for increases in the fed fund rates. How long can the government keep interest rates this low? Not more than 2 years.
A novice that just wanted to tune in for now to listen and learn from those who have more experience on the matter.
I agree the stock market and the bond bubble are “clear and present danger!”
I am shifting a increasingly higher percent of my assets to precious metals (gold and silver, etc.) and ETF’s inverse to the US dollar and stock market, high dividend commodity stocks, and selected ETF’s long commodity rich countries Australia, Canada, and Brazil, and the MERKX currency fund .
I am approacing two years in the market, one studying and nine months trading. Two thirds of my money was rolled into an IRA (money market) and I currently have a couple of inverse funds QID/SH and will be buying SEF on Safe Money’s recommendation. The rest is at Scottrade.
In all honesty I am nervous about inverse funds because of the beta slippage, which I do not really understand. I assume it is within an accptable limit or you would not recommend it. I can see I am making money for now.
My main plan of attack is still to read any and everything you write. I hope the Tuesday opportunity is someone to aggressively pursue profits during the crash and guide people like me with marginal experience!
If you are looking for subjects to write on, I am very interested in inverse funds, which brokers will survive the test, and the logic of cashing out a 401K and others that government maintains control.
I sincerly appreciate you and your team and the knowledge you have shared and continue to share.
Sam Elledge
Dr. Weiss,
Per Elliott Wave, I expect the dollar to reach its next low by the middle of July, after which it should set a new high for the year. This dollar reaction may be due to further termoil in the bond market and could be driven by SCOs (think BP) and associated CDS.
I think that you are correct that the bond market is a large bubble, likely too big for the Fed to save this time. The bond market and associated uncertainity will continue to drive the stock market lower, all thought near term the market is oversold and last quarter’s earnings will not be that bad. It is the uncertainity for this quarter and next that will weigh on stocks, which will continue to weigh on public sentiment, dragging it lower along with economic activity.
I hope to expand my short positions through ETFs and perhaps go long UUP in a week or so.
Thanks,
J.S.
Martin, You have been bearish on 10/30 year treasuries for over a year now, but this has, so far, not been a good investment thesis. You were also bearish about the mkt during 09. Two interesting bears I follow are suprisingly bullish short term, Kass and Phil, so you may wish to reflect on the timing of your forecast for Armagedon. No doubt we need to address the defecits, but the mkt is still a very short term focused beast and investors need to be advised accordingly.
as you expect the us dollar to fall , is there any point in making money in the us . as i live in australia i currently lose on the deposits into my us account, however if the usd falls i will lose again when i return the fund back to aust , meaning i will have to make 35% more profit to soak up the currancy losses . can you please give me your thoughts on this . as i have subscribed to interest rates profits i am wondering if it was such a good idea. regards . andrew zacharia adelaide aust.
what is a person to do and how can you make money on the slide in value of bonds
I think I would have more in short term treasuries. Any suggestion is helpful though.
I only have a limited amount of money to risK ro invest.
Say $25,000 . What would you invest in before the bonds and dollar go down?
I would like to follow your investment advice.
ETF’s?
What are examples of the major profit opportunities if bonds tank?
Thanks for the input. There are so many different “expert financial advisors” That it makes it very difficult to understand and plan to invest. I have spent most of the last 2 years out of the market and want to get back in. some say that the stock market will go down and others, with eqyually persuasive arguments say that it will go up.
The world does not make much sense.
I am in a state of rage against our leaders, but intrigued with what my friends on this committee think.
Hello, I hope to short the DOW with FAZ (3X inverse DOW – shot up to over $2000 in March 2009) ETF. As the markets fall I hope gold mining stocks will dip to some degree (due to the giant sucking sound down around 6500) and somewhere near the bottom of the DOW I will take my profits from FAZ and plow them into gold mining stocks such as EGC because during the Great Depression the only investment that increased in value was gold and also, in preperation for when investors lose faith in the Dollar as a safe haven or as a reserve currency against the Yuan. Please let me know if you see a flaw in my plans. Thanks, Tom
What’s in the balance?
How can the administration, government officials, politicians say, that the unbalance will
shortly become balanced, when they put even more debt on one scale already vastly outweighing the other? Is this simple picture too simplistic?
Mountains of debt, nobody can turn around, well, maybe except BP, that seems to have struck paydirt .
Hmm. If they just knew how to handle it.Well I’m just sort o’ joking while I should be sad..
Or I figure them sitting in a tree: All of the above plus all the recipients of money, they didn’t earn; sitting on a withering branch with big saw blades cutting into it, in stead of nourishing the tree and let fewer sit idle.
To sustain life can be a challenge, and we adore and admire those who show the way, in stead of ending up in jail.
Some without arms or legs, some handpicked to become a Dalai Lama, who ends up as a Nobel Price winner, even if he was pulled out from several thousands of poor families to be thoroughly schooled and trained. Just by chance.
I don’t know about you, but a mystical foresight? No , I believe in our amazing adaptability and learning capacity of each and everyone. That shows that probably most children are far more able than the professional care industry wants it to look like, because then they have to think outside the box.
Short TMF
Bonds away!
economic conditions in the world are certainly unusual and very uncertain. None can tell with certainty what the future will reveil. Most centiments by the general public and the experts is that worse times are ahead for europe and north america.
The situation were all goods are made in china [and similar economies] in which all we do is buy there goods making little or nothing cannot be sustained foe- a long period of time. The result will be and must be –that they will get richer and we will get poorer. The the playing feld has been leveled we will all get the same wage. Therefore we can only look forward to a deteriation of our welth until the asian economies have caught up tp ours.
In other words who has ever heard of two farmers [or manufactures or families] who live side by side and the one party makes all the thinks and all the other party does is buy the goods –to make matters worse the buying party borrows the money from the party that makes all the goods.
Even a simpilton can see that this cannot be sustained and sooner or later the party that makes the goods will be wealthy and the other party very poor
I have a great fear of the future, my wife and I inherited a lot of telephone stock (AT&T and Verizon) and have bought a junk bond mutual fund (Northeast Investors Trust) many years ago. Even if we sold everthing we would have to pay capital gains. Without showing in a step by step fashion we are powerless to know how to manage our portfolio. Would like to buy gold but don’t know how to go about doing it.
Hi Martin:
I have shorted the dollar and hve TIPS and WIPS.
V
Money has flooded treasuries for a safe haven in the fear of deflation. It is interesting to look at graphs of Money supply over the last few years before the collapse it was parabolic up and over the last year or so is going slowly down, but it still is at huge levels historically. It seems to me that all that money in the treasuries will zoom out when the fear of deflation is over and inflation kicks in, but who knows when that will be. I suspect within the next year, That inflationary wave should be huge, but right now the deflationary gate or finger in the dyke, is holding back the bigger inflationary monster. Probably the safest way to preserve wealth is to be in cash and gold, anything else is speculation, if you’re good at it you win, if not you lose.
I’m planning to jump in with both feet on your recommendations, yours, Mike’s, Larry’s, Claus’, etc.. My first thought is to buy Bonds when the yields get up to 18+% and collect that for a long period of time, but Inflation will be so severe then that probably won’t be a very good idea either. I’m currently north of 40% gold. I’m leary of Options. I’ve tried them and found that for each real gain I’ve had enough losses that I’ve ended up with greater losses than gains. I’d better stick to ETFs. Blessings.
out of stocks , in cash and short term bonds , go to intermediate and long term bonds as the treasury intermedi9ate bomd yields 5% to 6%.
Short the dollar ETF [UDN] and I would short the bond ETF [TBT] for investors with less knowledge of how those markets work. For more sophicated investors: Options and Futures will work nicely in both markets. 10% in each area or Follow the SMR as to when to get in and out, if your not sure.
Hold GOLD assets: ETFs popular GLD; SGOL; Bullion in Troy 1 oz; 10 oz bars; Gold stocks about 10% in each asset class. OR Silver [ poor mans' gold ] ETF SLV.
I would use Mutual funds, great for diversification for the risk shy investor: UNWPX precious mineral fund; USERX Global Gold & Precious metals fund.
Energy : You can use ETFs for energy: There is Vanguard’s Mutual Fund for Energy. I would perfer selected stocks, for the long haul [ 5 + years and reinvest dividends & CG ] China plays:
CNOOC [ CEO ] or Petro China [ PTR ] agasin these would be my prefered stocks for the long haul [ 5+ years ]. 5% in each stock or energy class.
My personal favorite stock: Energy class, Natural Gas [ LG ] I have held theis stock from 1957 and I still own it today> It was bought for retirement.
is the Fed entitled to buy S&P by law ?
Yes, the dollar’s weak. But which currency isn’t? Except the Chinese, which is not for investors. It seem like there is no safety in any store of value.
Would you say, this time it’s different? Before the global financial crash the net foreign security purchases which was consistently short by 10-20 billion dollars was always covered by a mysterious hedge fund down in the Caribbean. All while this was going on S.Korea ,Japan, Europe, and other nations were reducing their purchases of US debt. Now the fed is openly buying government debt. Remember: the 14 billion auction where 7 billion reappeared a week later on the feds balance sheet; the audit results of the Central Bank of Vietnam after the gold bullion was surgically inspected; the Central Bank of China’s audit whose bullion source was our Federal reserve; last, but not least, the government officials from Japan who were stopped at the Itilian Swiss border by customs and were supposedly carrying 130 billion in US bearer bonds. Yeah, I would say that things are different this time. It sounds like a World War II story of the OAS.
What I wonder is, are we trading instruments that are worth anything. Remember how long GM common stock traded after it was worthless? People actually made money trading GM that was worthless in the end. That is scary!
Treasury bonds– December 2008, 30 year bond, cost to buy 1,426.00 and someone above questioned Mr. Weiss’s bearishness over these succeeding years? Today the 30 year bond closed in the 1040s.
I think the game is about up should the G-7 or G-20 not come up with an acceptable international currency before the debt torpedo hits our shores, we will be trading corn and wheat for oil. That would just about wipe out anyonewho holds physical dollars.
The dollar must survive, however. Funds stink. How many retirement funds held GM, Chrysler and Ford common stock to the bottom? How many now hold Muni bonds that will have a significant default rate along with corporate bonds?
One final comment on bonds: BEWARE. Look what happened to the GM bond holders. They get a 10% stake in the new GM.Whee! Then the Indiana State teachers and state police retirement funds which held colateralized bonds and took it to the US Supreme Court and were rejected. That one is the most troublesome as it puts us on the path to becomming a first rate banana republic.
What to buy? I think Larry is closer to preserving purchasing power. Energy stocks with low debt, XOM, CVX, MRO. Commodities, maybe even a futures contract and take delivery on metals. All currencies are questionable in the near term.
To summarize, I do not have a clue where this will end and turn around, neither do I believe the people with “impeccable credentials” in Washington D.C.
Test. hello Weiss blog. Huge fan of silver , then gold for these times. It is not a cure all, however it is without saying, much better than holding , CD’s Dollars or any other paper currencies. I like PM’s miners also for those that want more risk reward exposure.
Cheers to all , ProTicker
I feel sorry for Americans (North Americans that is, south of the Canadian border)
The U.S. gained a great deal from being the world’s reserve currency from Bretton Woods until today. But now (as in the early 80’s) the price of commodities, which are of course priced in dollars, means that billions of dollars have gone abroad to be re-cycled. China has to maintain parity to avoid its products from being too costly for Wal-Mart to import (and make a profit on) which would put millions of Chinese out of work.
Adam Smith in his book “The Wealth of Nations” suggests that specialisation leads to enrichment for all, but Smith does not appear to deal with the situation where the capacity to produce, exceeds the capacity to consume (as happens from time to time) It is very EASY to move digits on a computer database (representing money) but it is very DIFFICULT to move skills and experience and humans to new industries, products and services as these evolve, and need to be gained over time.
EG: If we produce 4/5 bedroom houses, these are too big (expensive) for young couples. If we produce 1/2 bed flats/appts these are fine for a few years as 20 somethings, but they quickly become young couples and then families, and so are too small.
Young kids don’t buy muscle cars, or gold bars, or adult movies, or condoms, BUT they do eat, drink and breathe and use nappies and baby food and toys. Until we can align our birth-rate globally with our industrial and economic policies then we will always get mismatches. The prices of products is supposed to take care of these demand/supply irregularities, but over-supply in the absence of current, accurate up-to-date information on birth-rates, marriages/household formations and demises together with other demographic related information, will always at best give us historical data, and leads us to make the wrong things, too late for the bulges in birth-rates that have been so prevalent as a result of the post WWII baby-boom.
The Book by Robert Beckman (“The Downwave”) examines this in some detail, and suggests there is a major boom and a bust every 2 generations (average 54years) as economics, and wars cause birth-rates to expand and contract leading to supply problems later – (women generally have kids in the 20’s to early 30’s, who have kids in their 20’s to early 30’s etc)
The size of the bust is equal and opposite to the size of the boom that preceded it. Government can at best postpone it, and prolong it.
The above though assumes we can keep having babies at whatever rate we feel we can, until the planet bursts at the seams and there are inter-continental wars because 10 billion people can’t all eat, drink, be merry, have diesel or petrol driven cars and still have a planet that has a wide variety of open spaces and natural resources to achieve that.
As of 2000 we had 6 billion people. By 2018 it will be 7 billion, by 2028 will be 8 billion, and a billion more every 8 or so years after that. Commodities will fluctuate but the price is going one way long term – up…
Silver is the most underpriced commodity on the planet. 90years ago, there was probably 200billion ounces above ground. Most of which has been used up, for jewelry, coinage, silver-plating, etc etc… and the number of applications is rising exponentially. Short-term the dollar is going to rise as people flee uncertainty worldwide, but as bond prices fall (yields will be bid down because of their certainty) then inflation will be taking hold in the commodities markets and that is the time to buy GOLD/SILVER/OIL and the companies that PRODUCE them.
W.
Martin WEiss said that the Treasury Notes in Greece are 18%.
Can we invest in those? In what currency would our money be in? Then there’s the exchange rate but still 18%. That’s worth checking out. Right?
Hello Martin
Thanks for all the great info you provide.
I have one heartfelt request to make. Please, when you and your agents speak about our government and its destructive financial policies, stop making blanket statements that ALL the politicians are clueless or malicious. Please – recognize the heroic efforts of RON PAUL on behalf of our Country’s well being, including yours! Do this much to honor his tremendous struggle through the years! Each time I read these blanket condemnations I ache! Instead of souring our public on he who is trying to help – against tremendous odds- you have a venue to awaken people, who can lend their support in the political arena even as they learn how to protect and grow their finances.
Martin – surely you mean trillion not billion? Goldman Sachs could fix it in a month of profits made from indirect government subsidies otherwise.
A more serious point is that while an airbag doesn’t stop a crash its useful if one didn’t have enough time to see the problem and take evasive action. Thats what the money was – an air cushion to avert an infinitely worse fate.
Now should things deteriorate in the Fall then there has been warning and you guys have been joined by a chorus of other commentators; fix your mortgage; sell fixed income bonds; exit stock market bar gold etc; watch for wobbly banks.
This time only an impaired driver would miss the oncoming danger.
I don’t see bank ratings at TheStreet.com any more. Can you get bank and insurance company ratings on the Weiss web site? I’d like to know about some annuity carriers ratings.
Any ratings on life insurance companies here?
J…
Many have been saying that a crash is coming for at least six months so IF it comes timing will be important as always. Timing and what specific stocks or ETFs to short, that’s what we need from your experts!
My Broker and others keep warning me that the DOLLAR is ready to collapse and be worthless!
I have a hard time accepting this scenario believing if you hold cash in a FDIC accout you have the Government backing of at least $!00,000. or $200,000. per account should the financial system collapses as they think! I have cash in 3 different credit worthy Banks with FDIC protection. Should I do something different,buy Gold,a different Currency or what else can you recommend.
Invest in inverse ETF TBT, gold and foreign markets. The USA is down the wrong road to recovery in my opinion.
I only have a few thoughts-by listening to you Martin and your team of experts, I am learning everyday. I am really grateful for individuals like yourself and others on the blog-they give knowledge and strategies.
Martin,
what exactly do you mean by “debt liquidations” today, Is that debts paid off? cause that would be good, no? or is it debt written off? bad for the banks but Ok for the debtors…it really seems like the big debt of the private sector is transferring to the public sector where what? we flush the dollar? and start the Amero with a clean balance sheet? Its hard to believe big money could screw itself like that…and if that does happen aren’t all of our investments, no matter how “safe,” worthless except maybe actual gold (and guns)?
Martin can you share your thoughts about current excitement in the stock market vs the poor outlook for 2011?
Can you discuss about silver/ gold prices. Can it go up or down. and also about copper and natural gas in coming month?
Some business commentators suggest that nations may coordinate quantitative easing which would lead to higher stock markets but not affect the dismal economies. When all money is fiat do you think this is possible even in the face of poor economic data?
I took a very conservative position (no debts, all cash) but I feel like one of those people years ago who built an atomic bomb shelter in my back yard and filled in with rations for an attack that never came. When is this next bomb coming…….
weeks, years, decades?
Joe Dirt
Average guy who’s trying to listen
Martin, GOLD, of course. GOLD is the great equalizer in this bubble world we live in. It takes advantage of a collapsing dollar, stock market,failing world economy, and the soverign debt crisis. The GOLD market compared to stock market as well as the bond market is very small. It won,t take but small shift of capital out of those markets by global investors to cause in the price of GOLD to surge. We can depend on the Federal Reserve as you so often allude to to unleash the printing presses to devalue the dollar in an effort to mitigate our debt crisis.
Martin I’m so thankful for your wisdom in these matters. Keep up your fine work-we love out here!
I don’t think we will get to the point where we don’t have food, we have enought land to Farm, you just have to buy the seeds to plant. We will not have riots. Money will be tight but it will always be here. The thing to be careful is that you don’t get a problem with every one running off a cliff just because you don’t know when every one is running to the same thing. Granted we do have a problem in this country with elected leaders, who looked after their well being before ours, but we can change it and put people in that will be concerned to our real needs. All too long the American people just sat around with not a care because they think every thing will be given to them by the goverment, but this is Tax money we put in and should not be given out, with out it helping every one not just the few who know how to work the system. To start with Grants should be stopped right now. Tax free corporation’s should start paying their fair share.
We should have a new Tax and Fair Tax code every one can understand. Did you know that the public Service pension’s are tied to Social securty, They tell you how you will get your pension by age and so on, This should not be because it is not Social Security. Who is fooling who. Read the Gov Tax Code. The only thing is Social Security Pays Less. People who work Hard and Save should be rewared not the other way around, This would make people willing to save and work and not just look for a hand out from the goverment. What ever happened to Pride? May be this is the thing we need to get the family’s back together and working together with everone pulling the wagon. We got into this mess because the goverment keeps making laws so they can please a few for votes and to stay in office. If we keep making Laws we will not longer be a free country, we will not be able to enjoy what we had in the passed. These are trying times but we will get through it like we always have. I don’t think we will get to the point of not having enought Food or shelter. The stock market can make you money if you are carefull and don’t gamble in it, but it will take time to recover, take a lesson from the depression, every one did not go broke. The people we elect have to be accountable to us or we should get them out, we have to show them who is the real Boss. If they don’t know how to fix and run things right get them out don’t keep putting them back in. May be this is our chance to get things rigt this time. Spending money that is not yours to spent is easy. The goverment give away is a joke and will not work and will never work. The printing Machine for money has to go. Enought is enought. Interest Rate for you money in the Bank should be restored. That new Health Care Plan has to be looked at very carefully so it does not hurt us
, when they say it should help us.
Well good luck to all of you.